Sail To Cut Coupon For Rs300cr Bond Issue To 14.5%

Steel Authority of India Ltd (SAIL) is to pare down the coupon rate for its Rs 300 crore bond issue to be privately placed next week, following encouraging pre-marketing reports from merchant bankers.

The coupon rate will be about 14.5 per cent, a top SAIL official said yesterday. He indicated the rate would be closer to 14.5 per cent as against 14.75 per cent being considered earlier.

The bond issue has a greenshoe option of up to Rs 200 crore and will open in the first week of May.

The official said the public sector company is likely to bring down the coupon rate on assurance from merchant bankers that its issue will sail through even at a lower price.

 

The interest on the bond issue, which has received a AA+ rating from both Crisil and Icra, reflects the fundamental strength of the steel giant, the official said.

He said liquidity is available in the market and exuded confidence of the issue being fully subscribed. But he said a final decision of entering the market will be made in the next two days.

This will be the first of at least two more tranches of bond issues Steel Authority of India Ltd plans to make in the current financial year.

The funds raised will be used to finance SAILs on-going modernisation programmes at its Rourkela and Bokaro plants. The rehaul process in these two plants is in its final stages and nearing completion, the official said.

SAIL had raised Rs 900 crore last year through the private placement route. The funds were mobilised at an average rate of 16-17 per cent.

The easing of coupon rates this year indicates the comparatively easy liquidity position in the market.